Congressional Leaders Urge Biden Administration to Hold Former For-Profit Execs Accountable for Defrauding Students
FOR IMMEDIATE RELEASE:
October 18, 2022
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Congressional Leaders Urge Biden Administration to Hold Former For-Profit Execs Accountable for Defrauding Students
A group of six leading Senate Democrats today urged the Department of Education to hold for-profit college executives personally liable for defrauding students. The letter, sent to U.S. Education Secretary Miguel Cardona, reiterates that the Department has broad authority to recoup losses from unscrupulous executives and criticizes Department officials for failing to do so.
“Despite the Department repeatedly finding that fraudulent for-profit colleges widely mislead students and misrepresented their costs, ability to transfer credits, and earning potential, their executives continue to take home huge profits,” the letter says. “Too often, students are left saddled with debt and no career path while the executives at these institutions prioritize profits over student outcomes.”
Senators who signed the letter include House Judiciary Chairman Dick Durbin (D-IL), Senator Elizabeth Warren (D-MA), Senator Richard Blumenthal (D-NY), Senator Tammy Baldwin (D-WI), Senator Cory Booker (D-NJ), and Senator Mazie Hirono (D-HI).
Over the last year, the Department has issued billions of dollars in student debt relief for defrauded borrowers. In June, the agency granted nearly $6 billion in student loan relief for defrauded students who attended Corinthian Colleges, a now-defunct for-profit college chain. Asked about whether the Department planned to pursue action against the school’s executives, a spokesperson said the agency would not hold any executives personally accountable claiming the executives did not personally sign the Program Participation Agreements (PPA). A report from The American Prospect found executives had signed the PPAs, though the Department has yet to issue further comment on the matter.
The Department also recently discharged more than $1.5 billion in student debt discharges for 79,000 students. Westwood was accused of engaging in widespread fraud and made misrepresentations about the value of its credentials and programs.
“There’s no doubt — granting defrauded students relief is absolutely the right thing to do,” said Student Defense Vice President and Chief Counsel Dan Zibel. “But taxpayers should not be left holding the bag for these schools’ misdoings while their executives make off with millions of dollars in student aid. The Department has the power to hold these owners and executives personally accountable, but their choice to let them off the hook is baffling.”
Student Defense has long advocated for former executives to be held personally liable. In October 2020, the organization released a report, Protection and the Unseen, detailing how and why the Department should leverage this authority.
A copy of the congressional letter can be found here.
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